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NEW YORK, March 8 /PRNewswire/ -- Riddell Sports Inc. (Nasdaq: RIDL) announced that it has entered into a letter of intent to settle the claims asserted against it in two separate fraudulent transfer actions, BRUCE LEVITT, BANKRUPTCY TRUSTEE FOR MACGREGOR SPORTING GOODS, INC. NOW KNOWN AS M. HOLDINGS, INC., PAUL SWANSON, BANKRUPTCY TRUSTEE FOR MGS ACQUISITION, INC. V. RIDDELL SPORTS INC., ET AL. No. 95-2261 (Bankr. D.N.J.) and INNOVATIVE PROMOTIONS, INC., ET AL. V. RIDDELL SPORTS INC. ET AL. IN RE. MACGREGOR SPORTING GOODS, INC.), (Adv. Proc. No. 94-2656 (RG)).

In the Levitt action, the bankruptcy trustees of MacGregor Sporting Goods, Inc. and MGS Acquisition, Inc. alleged that Riddell failed to pay fair consideration for its 1988 and 1989 acquisitions of substantially all the assets and businesses of two former second-tier subsidiaries of MacGregor Sporting Goods, Inc. at a time when MacGregor was insolvent or undercapitalized. The businesses acquired included Riddell's core football equipment business, the "MacGregor" trademark licensing business and the non-football uses of the Riddell trademark. The trustees sought rescission of the purchases or unspecified damages and voiding of the liens of Riddell's principal lender in the property at issue. Similar claims were asserted by certain purported unsecured creditors of MacGregor Sporting Goods Inc. in the Innovative action, in which action the trustees had intervened. The purported unsecured creditors sought rescission or damages of at least $22 million plus interest, and voiding of the lender's liens.

Under the proposed agreement Riddell will pay the trustees approximately $1.4 million in the aggregate in exchange for the full settlement, compromise and release of all claims against the Company, its principal lenders and others arising out of or in connection with the 1988 and 1989 transactions. The proposed agreement further provides for an injunction requiring the Trustees to satisfy any and all valid and enforceable claims arising out of or related to the 1988 and 1989 transactions out of the settlement proceeds. Riddell indicated that it would take a pre-tax charge of $1.9 million against 1995 earnings to reflect amounts payable under the proposed settlement and related expenses including anticipated costs of finalizing the settlement agreement and obtaining bankruptcy court approval.

Riddell indicated, however, that there can be no assurance that the signing of the letter of intent will lead to a final settlement because the settlement is subject to execution of a definitive settlement agreement and must be approved by two bankruptcy courts. Riddell understands that the creditors' committee for MacGregor has retained new counsel which intends to oppose the settlement.

David Mauer, Riddell's CEO, commented, "While we are confident that ultimately we would have prevailed on the merits of the case, the expense and management time devoted to it is counter to our desire to focus our resources on the new strategies recently launched by the company."

Mr. Mauer continued, "The settlement is costly, but the expense of defending ourselves, even in what we view as a meritless case against the Company, is also high. Accordingly, we believe this settlement is in the best interests of the Company and its shareholders."

Riddell Sports Inc. is the world's leading manufacturer and reconditioner of football equipment. The Company sells football helmets (including helmets made for display purposes for collectors), shoulder pads and other sports protective equipment under the Riddell brand, and provides reconditioning services under the Riddell/All American name. The Company also licenses the Riddell and MacGregor trademarks for use on athletic footwear, leisure apparel and sports equipment.
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/CONTACT: Lisa Marroni of Riddell Sports Inc., 212-826-4300/


CO: Riddell Sports Inc.; MacGregor Sporting Goods, Inc. ST: New York IN: REA LEI HOU SU:

MP-HD -- NYF037 -- 1641 03/08/96 14:06 EST
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Publication:PR Newswire
Date:Mar 8, 1996
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